WT Business Beat

By Nick Wakeman

Ted Davies talks longevity, Unisys' comeback

Ted Davies has spent nearly six years at the helm of Unisys Corp.’s federal business, and in that time frame has become one of the longest serving leaders of a major federal business in the market.

When he took over in late 2008, I don’t think you would have laid odds that he or even Unisys would be around that long.

Even he describes that time in 2008 for Unisys in dire terms.

Ted Davies, Unisys

“We had over a billion dollars in debt, and it was coming due in the next 18 months,” he said. “The company was not in a good financial situation. We were bleeding cash and the credit markets were pretty locked up. People were looking at us like, ‘Are you guys going to make it?’”

But evidenced by the fact they are still here and still winning contracts, the company and Davies have more than survived.

I recently had a chance to sit down and talk to Davies about his longevity and Unisys’ positioning in today’s market.

WT: How did Unisys pull out of that nose dive?

Davies: The big focus for the first couple of years was to stabilize the business and get our costs out.

How do you optimize your infrastructure? How do you stop doing some things you’d like to stop and do things you don’t have the money to do? How do you simplify the company and get the company profitable?

That was the real focus in 2009, 2010 and even 2011. We had to get ourselves into a position of financial strength rather than people looking at us like we’re on the ropes.

On the federal level, those first 18 months or two years were just a dog fight to hold onto all the business we could while the company was remaking itself.

We were under attack by a bunch of big re-competes that all happened at the same time.

[One of those was the IT infrastructure contract with the Transportation Security Administration, which was won by Computer Sciences Corp. and then went through a series of bid protests by Unisys.]

We were in the middle of the recompete when I took over. We took a good shot at it and came pretty close, but at the end of the day, they awarded to CSC.

WT: Can you describe some of the steps you had to take to rebuild during those first two years?

Davies: It was about stabilization. We worked to rebuild the sales team. We centralized sales which had been distributed across the organization. We strengthened a portfolio and solutions team and moved more resources into that team.

The goal was to be able to replicate solutions that we built for one customer and take them to others.

The other thing we did was break down the walls with the rest of the company. The federal business is less than 20 percent of the corporation. For us to operate as just a mid-sized federal contractor without the strength of the rest of the company was silly.

Over those first couple years, we were rebuilding the sales engine and we turned over much of the sales team and brought in new sales leadership and rebuilt our pipeline and revived the company. 2011 and ’12 were focused on that, and then we get to 2013, and ’13 was a dead market.

But we feel pretty good about where we are based on what we’ve built.

WT: How have these changes impacted how you pursue opportunities?

Davies: One of the biggest things we did was to begin to look closer at what we call Tier One deals. Anything over $20 million we began to look at as a leadership team.

There’s the sales leader, the portfolio leader, the three account leaders, myself and the chief financial officer. We look at all the deals early in the process.

When it was decentralized, you might have six deals on the civilian side that are better than the no. 2 and 3 deals, but you never got to them because everyone was doing their own thing.

Now, I can pull the larger deals to a central level, and we look at them as a team and say, these are our best deals, and these are the best people to work on them. We can realign resources against those opportunities.

The executive leadership is actively involved throughout the pre-proposal, pre-RFP phase, the shaping, the understanding of the competition and our differentiation.

It wasn’t that way before. We are fully engaged now.

WT: Can you describe how your solutions and portfolio team works?

Davies: One of the things we did was to define our areas of strength. What are we really good at?

We came up with four: The data center, application modernization and management, end-user support and security, which is cyber and a lot of biometrics. Integrating physical and IT security is something we are really good at.

Those define who we are, and we’ve invested in each because we want to be world-class in each. We build solutions in those areas, and we’re going to beat customer expectations in those areas.

We put in place four area leaders who are thought leaders, and they are out in the marketplace, developing new solutions and certainly leveraging what the company is doing.

In the teams under them, we try and cycle folks through. We’ve had folks go from the account team to the portfolio team and back. We try to keep people fresh. You want people who can go out to the market and see what is going on and then come back.

WT: When you look forward, where do you see areas that you need to focus on?

Davies: I think our model is sustainable, but the way the marketplace is buying is changing. One is the cloud. We’re one of the forerunners. We did the Google implementation at GSA three years ago. That was the first email migration to the cloud on an enterprise-wide basis in the government.

We’ve done about five of those since then.

The big thing right now is the Department of Interior Foundation Cloud Hosting contract. We were one of 10 to win and we won the first big task order to move the SAP implementation for Interior to the cloud.

This is an enterprise application. All of their business management systems are moving to the cloud. It’s a big new step.

We brought in a new partner as a subcontractor, Virtustream. They have done world-class SAP to the cloud implementations in the commercial sector but never in government. So, we are partnering with them and taking them through the FedRAMP process.

WT: How is the shift to the cloud changing the market?

Davies: As a systems integrator, you used to think: I’m going to take these four technologies, put them together and deliver them. Now, you might be taking different providers of different services and integrating them. It’s a new role for the systems integrator.

The business model is different. In the past, you’d accumulate your cost, add your fee, and there it is. Now agencies want to pay by the drink.

WT: Can you give me an example?

Davies: The IRS uses huge amounts of storage and they want to keep data in their own data center. But we won a contract in 2012 to provide storage to them on a consumption model.

With our partners, we buy storage equipment and put it on the floor at IRS. We manage the entire storage environment, but they only pay by the storage they consume. In the past, they were buying tons of boxes and sticking them on the floor whether they used them or not.

WT: But that means you are bearing the upfront costs?

Davies: It’s an interesting model. It shifts [the agencies] capital expense dollars to operating expense dollars. They just write us a check each month for the storage they use.

For contractors, it affects your balance sheet, and it affects the way you bid and the way your cost of capital accumulates. It’s a big shift, but we are figuring it out.

We’ve learned a ton on the first couple of these we’ve done, and we’ve gotten better. We don’t have it slam dunk down yet, but I think we’re ahead of some of our competitors.

The IRS calls this a 10-year partnership, and our leadership is fully engaged in delivering, and I think that is a competitive differentiator for us.

WT: Do you think the condition you were in five years ago and the changes you had to go through put you ahead of the curve compared to your competitors?

Davies: Absolutely. When you’re on the ropes, you have think differently than when you’re fat, dumb and happy.

Five years ago, the industry was still riding pretty comfortably, and we weren’t. We had to get out of it quickly, and that made us much more hungry and aggressive.

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